The formidable problems encountered in developing a malaria vaccine, and the ability of Plasmodium falciparum to become resistant to new drugs, have stimulated interest in using combinations of drugs for treating this disease, which claims more than a million lives a year. One drug of current interest, artemisinin, was isolated by Chinese investigators from a traditional medicinal herb. Esters and ethers of dihydroartemisinin have been prepared by several groups for structure-activity studies of their antimalarial properties. These demonstrated that the peroxide bridge was required for pharmacological activity. In order to increase the functionality of the molecule, we investigated the ability of the fungus Beauveria sulfurescens to introduce a hydroxyl group into the N-phenyl urethane of dihydroartemisinin. Two products were isolated from these studies. One was shown by (1)H, (13)C and 2D nmr studies to contain a new hydroxyl group, present as a hydroxymethyl, and still had intact the peroxide group required for biological activity. The structure of the second product was also determined by nmr and it was found to have been formed by a rearrangement of the peroxide group. A variety of derivatives of the first compound will be prepared and tested for their activity against cerebral malaria.